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SABRA LANE: A Nobel Prize winning economist has lashed out at what he describes as the 'politicisation of climate change'.

Joseph Stiglitz says one of the most urgent problems for the world to address has been hijacked by coal and oil companies.

Professor Stiglitz has spoken to the ABC's chief economics correspondent, Emma Alberici, ahead of his visit to Australia to collect the Sydney Peace Prize.

JOSEPH STIGLITZ: If more and more of Australia are not liveable because of climate change, you're not going to be better off.

You know, the future of the world, let alone the future of Australia really is at stake when we are talking about climate change.

The evidence is overwhelming and I was on the Intergovernmental Panel on Climate Change that reviewed the evidence back 1995, and I've kept looking at the evidence and you know, the one mistake we made in 1995 was that we didn't anticipate how fast things were going to change.

We didn't fully anticipate some of the effects like the increase in weather variability, the hurricanes, the cyclones and it is I think, fundamentally short-sighted not, not to be thinking about this but over the long term, the real wealth of a country is based on the skills, the abilities, the innovation of the citizens and that is going to depend on the investments that you put in your people — not on coal, not on iron ore.

You know, I spent a lot of time in China. They are beginning to wake up to the dangers of coal. Air is not breathable, that's the most concrete immediate effect but they too understand the dangers of climate change.

So, I think there will be a global consensus on eliminating coal and that means it is all the more imperative for Australia to get off coal.

EMMA ALBERICI: I want to know how you explain the politicisation of climate change as an issue, given so many well regarded economists like yourself indeed — the Nobel Prize in economics has gone to William Norhaus this month, who has pioneered a framework for understanding how the economy and climate interact — and yet on the other side we have this politicisation of the issue such that if you want to reduce carbon emissions, certainly in this country, you're a green leftie. And if you agree that it is all a bit of alarmist nonsense, then you're really a true conservative.

JOSEPH STIGLITZ: Yeah, I really, it is a little bit of a puzzle. You know, there are special interests who make a lot of money out of fossil fuel — coal, oil companies — and they have an economic interest to try to persuade people that its hokum, that it is a liberal conspiracy.

It's not. I mean, even in the United States, responsible conservatives have come forward and said we need a carbon tax to discourage the use of carbon — but they've recognised that we need, people have George Shultz have recognised that we need carbon tax so the reasonably centre, what you might call the old Reagan Republicans have recognised that climate change should not be politicised.

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